It is always sad to see people that have dedicated their skills to make a difference in our industry get laid off. It has happened too frequently in the last two years in the media, and the trend has now extended itself to the world of analysts. Some individual analysts, Erach Desai for example, have started their own consulting organizations instead of being associated with an investment banking firm. Now the news that Gartner Dataquest has decided to close its CAD group at the end of this month and terminate coverage of EDA highlights once more the real nature of the industry.
When three of the handful of publicly traded EDA companies control about 73% of the industry revenues as Merrill Lynch Research's Jay Vleeschhouwer stated in his last report, one only needs to look at Cadence, Synopsys and Mentor, to determine the state and direction of the industry. By adding Magma to the input data one has enough to develop a sufficiently accurate picture of the industry to advise EDA corporate planners and independent investors on both growth opportunities and possible pitfalls.
Gartner has thus made a difficult but financially sound decision in terminating its EDA coverage. In spite of the excellent professional qualifications of each of the members of the CAD group, and the technical leadership they provided under the able guidance of Gary Smith, the business side of this enterprise has become less justifiable. The four largest companies have grown an internal knowledge of the competition and thus have lessen their reliance on the input from Dataquest, while few of the smaller companies have developed the marketing bandwidth to take advantage of the private analysis offered by Dataquest.
Just as the amount spent on advertising and the changing nature of the ads have shaped the reorganization of the industry coverage by media giants like CMP and Reed Elsevier, so the amount of money spent on independent market analysis is reshaping this segment of the industry. I have no doubt that companies will continue to rely on independent input for their planning, but this help will come from individuals or small organizations that can operate with a significantly smaller overhead than Gartner. If you really think about it, supporting capabilities, like media, PR, and market analysis, are now resembling the nature of the industry they serve: innovation and creativity come mostly from small companies and individuals who find a way to believe in their own ideas and convictions and who are successful for what they know and contribute, not who they work for.
And all of us, faithful attendees of the Dataquest event on DAC's Sunday, will miss what had become the popular get together that kicked off the conference in style.
Please send your feedback to me Gabe Moretti. I am eager to hear your opinions on this matter.